MTN strikes back at its critics over its white CEO

MTN, Africa and Middle East largest mobile phone group, has hit back at criticism by Black Management Forum (BMF) and the Public Investment Corporation (PIC) over its appointment of a white CEO – Rob Shuter. By Staff Writer

MTN defended a decision to appoint Shuter, outgoing Vodafone’s CEO of the European cluster and ex-CEO of Vodafone Netherlands and Vodacom chief financial officer.

This week BMF said in a statement that this appointment by MTN contributes to the steady decline in the number of black South Africans at the leadership helm in companies.

Shuter replaces Sifiso Dabengwa, who left the mobile phone operator on 9 November 2015 following a $5.2 billion (over R74 billion) fine imposed by the Nigerian authorities for failure to register subscribers, resulting in the telco losing R75 billion ($5.4 billion) of its market value.

BMF said on Wednesday said that it viewed the decision by MTN to appoint Shuter as a serious blow to transformation. “The BMF’s position is informed by the clear reversal of black representation in Top JSE listed companies. There is a general unwillingness for transformation at top management level which has resulted in the decline in the number of black South African CEOs” BMF President Mncane Mthunzi said in a statement.

The PIC, which is MTN’s single largest shareholder, with 16.63% of its stock, on Friday told Business day that it had not been consulted before the public announcement on Monday of the appointment of Shuter.

“The PIC would have preferred a black CEO,” CEO Daniel Matjila told the newspaper.

But MTN has sought to repel the criticism and issued a statement on Friday stating that transformation and empowerment remain at the core of its ethos and culture. “Over the last 22 years, MTN has been one of the standard bearers of BEE and overall transformation amongst the top 10 JSE-listed companies.”

It added that diversity is its key differentiator and is fundamental to its success.

 

To further entrench empowerment into the business, a public scheme, MTN Zakhele, was launched in 2011 with 124 000 black shareholders.

Here is the full statement below:

 

MTN Group’s growth into a leading multinational telecommunications company has in itself been a story of shared growth within the economies we operate. From humble beginnings, as a local and regional company, MTN has propelled itself into an operation spanning 22 countries in Africa and the Middle East, with a diverse aggregate population of over 600 million under its footprint. Through our operations in countries as diverse as Nigeria, Cameroon, Uganda, Syria, Iran, Afghanistan and indeed South Africa, the Group supports a subscriber base of over 230 million. This is serviced by a staff complement of approximately 21 000, which represents almost 60 different nationalities. South African staff comprise 22% of the total group staff complement, of which 85% of the South African staff are Historically Disadvantaged South Africans (HDSA).

Transformation and empowerment remain at the core of MTN’s ethos and culture. Over the last 22 years, MTN has been one of the standard bearers of BEE and overall transformation amongst the top 10 JSE-listed companies. Outside of senior HDSA appointments, MTN enabled its staff to benefit from the growth and success of the business through a non-company and industry leading financed management “buy in” in 2006. This saw an allocation to staff members and created an owner managed black business cadre, 72% of which were HDSA. To further entrench empowerment into the business, a public scheme, MTN Zakhele, was launched in 2011; 124 000 HDSA shareholders were eligible to invest. On average, MTN Zakhele has been highly successful, with shareholders benefitting from a compound annual return of 29% since the Scheme’s launch in 2010. Further, over a period of 15 years, MTN Group shareholders have enjoyed one of the highest compound annual returns of the JSE, before and after the Nigeria fine of 18.4% and 17.5% respectively.

Diversity is our key differentiator and is fundamental to our success. Consequently, our employee base has a strong bias toward local talent as evidenced in MTN South Africa where the CEO, board and executive committee are comprised of predominantly HDSA persons. In addition, of the 22 CEOs across our operations, 9 are South African, five of whom are HDSA. MTN is a magnet for young professional talent in all its markets. All positions in the Group are filled on the basis of the company’s needs and objectives without compromising the medium-term transformation imperative in South Africa or any of our operational markets.

In the recent past, the Group has faced a number of challenges, including very tough economic conditions across our key markets, increased competition and heightened regulatory pressure, particularly around subscriber registration requirements. These come at a time when MTN is repositioning its business to ensure long-term sustainability as it aims to lead the delivery of a bold new digital world. Whilst transformation will always be important, innovation and strategic flexibility are equally critical given the global nature of the firm and the disruptive technological changes that are sweeping through the telecoms sector. To this end, the market has understood the changes made to the organisational structure as well as the appointment of key roles to address identified strategic gaps within the business. This includes the appointment of an internationally-seasoned Group CEO and President, who was chosen following an extensive global and local search. Ongoing empowerment and transformation will remain one of the key deliverables of the new Group CEO.

Notwithstanding significant efforts made in the spirit of transformation in South Africa, the Group remains sensitive to the diverse nature of its shareholding structure – 55% global funds and 45% domestic shareholders – and operations in order to achieve its long-term vision and objectives. The Group is proud of its transformation policy, record and trajectory, which, whilst varying in its depth from time to time, is informed by an emerging market vision and objective. Transformation is a broad process with many facets and not a single position or specific individual at a particular point and time, but a journey.

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